Wednesday, November 08, 2006

New Lending Idea

I stumbled across this site from some random ad around the net and found it rather intriguing.


The premise of it is that you can lend your money directly to other people that you would otherwise have sitting in a savings account. Now don't get a head of yourself and start thinking that this is crazy and how you don't think this could work.

What is going on here is that Zopa is like a middle man. They will do background checks on lenders before you lend them your money. Unlike a bank where you may pull in 4% for a savings account while they lend your money out to borrowers, on Zopa your money is lent out to borrowers, but they pay you the lending rate. So on average they are claiming that your return is roughly 7% rather than the 4% you would get from a savings account. They have basically eliminated the bank and are a service that does background checks on borrowers that you can lend to rather than banks doing these checks and lending your money to borrowers and keeping all the profit. With Zopa you get the lending return, not some bank.

Get it now? Isn't this an interesting idea? I thought so at least.

AT this point it is only in the U.K., but soon should be in the United States. They are backed by such magnates as the investment companies who backed Ebay, Staples, Juniper, Hotmail, Redgate, etc. For more info on those just take a look at Zopa's page on it:


Of course many won't be interested in such an idea, or trusting enough, but none the less I find it to be a very fascinating new concept for the use of the internet and hope that the company is able to succeed.

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